The Indian government’s initiative to offer an alternative to buying physical gold is back with its second tranche. The Sovereign Gold Bonds (SGBs) for 2023 are set to open for subscription soon. Here’s a comprehensive guide on how to get your hands on them.
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What are Sovereign Gold Bonds?
Sovereign Gold Bonds are government securities denominated in grams of gold. They serve as an alternative to holding physical gold. When you invest in SGBs, you’re essentially paying the issue price in cash, and when the bond matures, you’ll receive the cash equivalent of the then-prevailing gold price.
Where can you buy Sovereign Gold Bonds?
Online: If you have a demat account, subscribing to SGBs is a breeze. You can also apply directly through your bank’s online portal. Offline: Head to any of the designated receiving offices and fill out Form ‘A’ or its equivalent. You can get these forms from issuing banks, SHCIL offices, certain post offices, and agents. If you prefer, download it directly from the RBI’s website.
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How are Sovereign Gold Bonds Priced?
The issue price of the second tranche of Sovereign Gold Bonds (SGB) 2023-24 is ₹5,926 per gram. For those who opt for an online application, there’s a bonus: you’ll get a discount of ₹50 per gram off the nominal value. Remember, for online applications, you’ll need to make your payment digitally.
Who is eligible to invest?
Almost every resident Indian entity can invest in SGBs. This includes individuals, trusts, universities and charitable institutions.
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What more to know about Sovereign Gold Bonds?
Secondary Market Purchases: If you missed the primary subscription window, don’t fret. You can buy SGBs from the secondary market, available on platforms like the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The pricing here is governed by demand and supply. Returns and Interest: SGBs aren’t just about potential capital appreciation. They offer a fixed interest of 2.50% per annum, and they pay it out twice a year. Tax Implications: The interest you earn on your SGBs is taxable as per the Income Tax Act of 1961. But there’s good news for individual investors: you won’t have to pay capital gains tax when you redeem your SGBs. If you transfer your SGBs, you can avail of indexation benefits on long-term capital gains.
